Forum will address insurance-hike plan

With another 25 percent home insurance rate increase looming on the horizon, many homeowners on the Cape and Islands are looking for a venue to air their concerns and ask questions.

A coalition of lawmakers, advocacy groups and insurance representatives are answering the call.

On Saturday, a group called The Citizens for Homeowners Insurance Reform is sponsoring a free public information forum in West Barnstable to discuss “why homeowners insurance costs are spiraling out of control and what can be done about this dilemma facing Cape Cod and coastal communities.”

Speakers at the event include Jack Golembeski, the president of the Massachusetts FAIR Plan, state Sen. Robert O’Leary, Rep. Sarah Peake and Jack Clements of the Public Protection & Advocacy Bureau.

The forum is scheduled for 2 p.m. Saturday, May 5, at Cape Cod Community College’s Tilden Center for the Arts.

The event is being organized on the heels of an announcement by the Mass FAIR Plan that it intends to raise home insurance rates on the Cape and Islands by 25 percent.

The FAIR Plan, known as the “insurer of last resort” for Massachusetts homeowners, already raised its rates for the Cape and Islands by 25 percent last year.

By proposing the large rate hike, the state-run insurer is seeking to protect itself from potentially staggering losses in the event of a catastrophic event, such as a hurricane. The FAIR Plan is seeking an average rate increase of 13.6 percent for Massachusetts homeowners, but the hike will be substantially larger for Cape and Islands residents due to the potential for storm damage in coastal areas and other factors.

Over the past three years, many Nantucket homeowners have absorbed huge premium increases, or have had their insurance canceled altogether. The three companies on Nantucket that offer homeowners insurance – Albert G. Brock Co., Congdon and Coleman and Nantucket Insurance Agency – have informed those homeowners that their only option is the FAIR Plan, which is funded by private insurance companies based upon their respective market shares.

As the cost of reinsurance (essentially insurance for the insurance companies) has skyrocketed, many companies which had previously offered home insurance coverage through the three Nantucket agencies, including Dorchester Mutual, the Andover Group and Norfolk and Dedham, have decided to leave Nantucket altogether, or have stopped taking on new island customers.

According to the Massachusetts Property Insurance Underwriting Association (MPIUA), there are more than 2,189 Nantucket homes covered under the FAIR Plan.

Generally, houses valued under $1 million must be covered by the FAIR Plan, while larger vacation homes valued over $1 million are insured through such companies as AIG and Chubb.

State officials, including Cape and Islands state senator Robert O’Leary and Attorney General Martha Coakley, have already voiced concern about the proposed 25 percent increase.

“I understand the difficult pressure the FAIR Plan is under, however the solution is not to raise rates but to institute reform,” O’Leary said in a press release. “The Cape and Islands received a 25 percent rate increase last year. Enough is enough. The commonwealth must take action to solve the current homeowners’ insurance crisis.”

The state attorney general’s office has already appealed last year’s rate increase, a matter which is currently before the Supreme Judicial Court, and Coakley has already issued a press release regarding the proposed rate hike this year.

“FAIR Plan’s proposed increases would place an unreasonable burden on consumers. My office is committed to carefully reviewing this rate filing and advocating for consumers against any unjustified increases by the industry,” she said in the press release.

Reach Jason Graziadei at jgraziadei@inkym.com

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